Published by Broker Connect | Reading time: ~6 minutes | General advice only
Let’s be honest. Life insurance isn’t exactly the most exciting thing to think about. But here’s the thing: for a lot of Australians, it’s one of the most important financial decisions they’ll ever make, and most people either don’t have it, don’t have enough of it, or aren’t quite sure what they’re paying for.
In this post, we’re going to break down two of the biggest questions Australians ask about life insurance:
- Do I actually need life insurance?
- If I do, how much cover should I get?
No jargon. No pressure. Just straight answers.
So… Do You Actually Need Life Insurance?
Short answer: if someone depends on you financially, yes. Almost certainly.
Think about what would happen if you weren’t around tomorrow. Could your family cover the mortgage? Pay the bills? Keep up the kids’ school fees? For most people, the answer is an uncomfortable “no”, and that’s exactly what life insurance is designed to fix.
Here are some of the most common situations where life insurance makes a real difference:
You Have a Family Who Depends on Your Income
If you’re the primary earner or even a secondary earner, your income keeps the household running. Life insurance replaces that income so your family doesn’t have to scramble financially on top of dealing with grief.
You Have a Mortgage
A mortgage is probably the biggest financial commitment most of us ever make. Without life insurance, your partner or family could be forced to sell the family home at the worst possible time. A policy can pay out the remaining loan balance and keep the roof over their heads.
You’re Self Employed
If you run your own business, there’s often no sick leave, no employer death benefit, and no safety net. Life insurance (and income protection) can be the difference between your family keeping the business going or losing everything.
You’re a Stay at Home Parent
People often assume stay at home parents don’t need cover because they don’t earn a salary. But think about the cost of replacing what they do. Childcare, cooking, school runs, household management. That’s a lot of money, fast.
You Have Debts Beyond Your Mortgage
Car loans, personal loans, business debts. These don’t disappear when you do. Without cover, that financial burden lands on the people you love.
OK, I Need It. But How Much Cover Is Enough?
This is the question most people get wrong, often by underestimating how much they actually need.
There’s no single number that suits everyone. But a common starting point is to aim for cover that would:
- Pay off all outstanding debts (mortgage, loans, credit cards)
- Replace your income for a meaningful period (typically 5 to 10 years)
- Cover future costs like your children’s education
- Leave a buffer so your family isn’t under financial pressure while adjusting
A Simple Starting Formula
Outstanding debts + (Annual income x years of support needed) + Future expenses = Your cover amount
For example: if you earn $80,000 a year, have a $400,000 mortgage, and want to provide 10 years of income support, you’re looking at roughly $1.2 million in cover.
That sounds like a big number, but it doesn’t have to cost a fortune. Cover of $500,000 can start from as little as $6.08 per week.
Don’t Forget: Super Isn’t Always Enough
Many Australians assume their superannuation covers them automatically. And while some super funds do include a basic level of life insurance, it’s often nowhere near enough.
The average default super life insurance payout is around $150,000 to $200,000. Compare that to the $1 million or more most families actually need, and you can see the gap pretty quickly.
It’s worth checking what you have inside super, and then speaking to a consultant about topping it up with a standalone policy if needed.
What Type of Cover Do You Need?
Life insurance isn’t just one product. Here are the main types worth knowing about:
- Life Insurance (Death Cover): A lump sum paid to your beneficiaries if you pass away.
- Income Protection: Replaces up to 70% of your income if illness or injury stops you from working.
- TPD Insurance: A lump sum if you’re permanently unable to work due to disability.
- Trauma Insurance: A payment if you’re diagnosed with a critical illness like cancer, heart attack, or stroke.
Most people benefit from a combination of these, and a good consultant can help you work out what mix makes sense for your situation.
“But I’m Young and Healthy…”
We hear this a lot. And here’s the thing. Being young and healthy is actually the best time to get life insurance.
Why? Because your premiums are lower the younger you are, and you lock in coverage before any health conditions might make things more complicated or expensive down the track.
Waiting until you “really need it” often means paying significantly more, or being declined altogether.
Ready to Find Out What’s Right for You?
At Broker Connect, we make finding the right life insurance straightforward. Answer a few quick questions (takes under 2 minutes), and one of our consultants will call you within 24 hours with options tailored specifically to your situation.
No obligation. No pressure. No cookie cutter. Approach. Just clear, friendly advice.
👉 Get your free quote at broker-connect.com.au
Disclaimer: This article is general information only and does not constitute financial advice. $6.08/week based on $500,000 cover for a non-smoking 45 year old, white collar, no pre-existing conditions. Prices vary by age, health and lifestyle. Broker Connect acts as an introducer only and does not provide financial advice. Please consider your own circumstances and speak with a licensed adviser.